ANZ Banking Group Limited, in the matter of James v James

Background 2 On 16 May 2014 judgment was entered by consent against Mr James in the Supreme Court of New South Wales in the sum of $13,928,818.66 (the judgment debt). The judgment was obtained at the suit of ANZ after a number of companies with which Mr James was associated (the TLT companies) defaulted under loan agreements with ANZ which Mr James had guaranteed. At the same time, a cross-summons brought by Mr James against ANZ was dismissed (also by consent) and, on 26 September 2014, a cross-claim brought by Mr James against Grant Thornton Australia Ltd, an accounting company hired by ANZ to prepare a report about the TLT companies, was also dismissed (again by consent). 3 On 14 October 2014, upon the application of ANZ, the Official Receiver issued a bankruptcy notice to Mr James in the amount of the judgment debt. By this time, however, receivers appointed to the TLT companies had realised some of the companies' assets and caused distributions to be made to ANZ, with the result that the judgment debt had been reduced by more than $2 million. On 19 November 2014 Mr James applied to the Federal Circuit Court to have the bankruptcy notice set aside and orders to that effect were made by consent on 1 December 2014. 4 At ANZ's request, on 9 December 2014 the Official Receiver issued Mr James with a second bankruptcy notice (BN 177325), this time in the amount of $11,751,606.73, being the amount of the judgment debt less the amount of distributions made to ANZ by the receivers of the TLT companies. 5 Mr James did not pay the amount due under the bankruptcy notice, which was purportedly served on him on 9 March 2015. Nor did he apply to have it set aside. Consequently, on 20 August 2015 ANZ filed its creditor's petition. The petition alleges that Mr James owes ANZ $11,751,606.73 pursuant to the Supreme Court judgment of 16 May 2014, that ANZ does not hold security over his property, and that at the time the act of bankruptcy was committed he was personally present and ordinarily resident in Australia. 6 The act of bankruptcy is pleaded in para 4 of the petition: The respondent debtor failed to comply on or before 30 March 2015 with the requirements of a bankruptcy notice served on him on 9 March 2015 or to satisfy the Court that he had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross demand that he could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained. 7 The circumstances in which a debtor commits an act of bankruptcy are listed in s 40(1) of the Bankruptcy Act 1966 (Cth). ANZ relies on para 40(1)(g): if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: (i) where the notice was served in Australia - within the time specified in the notice; or (ii) where the notice was served elsewhere - within the time fixed for the purpose by the order giving leave to effect the service; comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained. 8 Section 52 of the Act relevantly provides that: (1) At the hearing of a creditor's petition, the Court shall require proof of: (a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient); (b) service of the petition; and (c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing; and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor. … (2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor: (a) that he or she is able to pay his or her debts; or (b) that for other sufficient cause a sequestration order ought not to be made; it may dismiss the petition. 9 Thus, in addition to proving service of the petition and that the debt or debts on which it relies are still owing, ANZ must prove the alleged act of bankruptcy. To do that it must satisfy the Court that: (a) it obtained a final judgment or order against Mr James which has not been stayed, being the final judgment or order attached to the bankruptcy notice; (b) it served Mr James with a bankruptcy notice on 9 March 2016; and (c) Mr James did not comply with the requirements of the notice or satisfy the Court that he had a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt which he could not have set up in the proceeding in which the judgment or order was obtained. 10 If these matters are proved the Court may make a sequestration order. Nonetheless, if Mr James can bring himself within the terms of s 52(2)(a) or (b), the Court may dismiss the petition.

The supporting creditors 11 Mr James is pursued by at least two other banks - Rabobank Australia Limited and the Commonwealth Bank of Australia (CBA) - who also claim to be owed large sums of money. 12 Rabobank (previously known as Primary Industries Bank of Australia) made a series of loans to various companies of which Mr James was apparently the sole shareholder. Mr James was the guarantor of the loans and, by letter dated 10 December 2013, Rabobank demanded payments of guaranteed amounts totalling $23,945,841.25. Mr James then unsuccessfully sought leave to bring derivative proceedings on behalf of four Rabobank companies and another company which had purchased real property and other assets sold by the Rabobank parties. See In the matter of Sundara Pty Limited [2015] NSWSC 1694. 13 Both Rabobank and CBA were supporting creditors in this proceeding but, after objection was taken to the late service of evidence on behalf of Rabobank, the evidence was not pressed, and Rabobank's solicitor asked to be excused from the proceeding. 14 The CBA obtained summary judgment against Mr James in the District Court of New South Wales on 31 October 2014 in the sum of $737,241.39. That judgment was based on Mr James' alleged failure to honour the terms of a guarantee to secure the obligations of another of his companies. Mr James did not pay the judgment debt so the CBA served him with a bankruptcy notice. A sequestration order was made but, after much litigation, the summary judgment and the bankruptcy notice were set aside and the creditor's petition dismissed. (For some of the long and somewhat tortuous history see James v Commonwealth Bank of Australia [2015] FCA 582.) The District Court proceedings have since been revived. In an amended defence filed in those proceedings, Mr James claims that the guarantee was procured by misleading and deceptive conduct in contravention of the Australian Securities and Investments Commission Act 2001 (Cth) and should be set aside either under that Act or under the Contracts Review Act 1980 (NSW). Mr James has also filed a cross-claim in which he alleges that CBA sold the security property at an undervalue and claims damages of approximately $2,150,000.

The evidence 15 In the affidavit verifying the creditor's petition, Phillip Leslie Kerr, a banker with ANZ, swore that he had had access to the books and records of ANZ, that Mr James was indebted to the bank under the Supreme Court judgment as alleged, that the bank held no security over Mr James's property, and that, at the time the act of bankruptcy was committed, Mr James was personally present and ordinarily resident in Australia. He also deposed that Mr James had failed to pay the debt or make satisfactory arrangements to do so within 21 days after he had been served with the bankruptcy notice. 16 In addition to the affidavit of Mr Kerr verifying the petition, ANZ relied on affidavits sworn or affirmed by the following individuals: Skye Lee Grainger, a process server, concerning service of the bankruptcy notice; Przemyslaw Kucharski a solicitor with Allens, ANZ's lawyers, detailing the factual background; Charles Mathenge Wachira, an employee of ANZ, to similar effect; and Kane James Kersaitis, another solicitor with Allens, containing information concerning Mr James' status recorded in the National Personal Insolvency Index in compliance with r 4.04 of the Federal Court (Bankruptcy) Rules 2005 (Cth). 17 Mr James relied on two affidavits previously filed in the Federal Circuit Court in an application to set aside the first ANZ bankruptcy notice, sworn by him and his mother, Irene Rose James. He also relied on an affidavit sworn by his solicitor, Richard John Bain Allsop, on 24 February 2016, to which a large number of documents were exhibited. At the hearing a further affidavit was read sworn by Ms James' husband, John Trenning, on 25 February 2016.

Service of the creditor's petition 18 Service of the petition is admitted.

The continuing existence of the debt and other non-contentious matters 19 I am satisfied on the basis of the evidence of Mr Kerr that the debt on which ANZ relies is still owing. It has not been paid and the judgment which generated it remains in force. Recently, Mr James applied to the Supreme Court to have the judgment stayed, but his application was dismissed: Australia and New Zealand Banking Group Limited v James [2016] NSWSC 108 (Ball J). On the basis of Mr Kerr's affidavit I am also satisfied that ANZ does not hold security over Mr James's property, and that, at all material times, Mr James has been personally present and ordinarily resident in Australia. None of these matters was in contention.

The issues 20 Mr James denied that he had committed an act of bankruptcy because he claimed that the bankruptcy notice had not been properly issued and that it had not been served. In any event, he submitted that a sequestration order should not be made. 21 Mr James did not contend that he has any present capacity to pay his debts. But he did contend that even if the Court was satisfied of the matters referred to in s 52(1)(a)-(c), there was "other sufficient cause" not to make a sequestration order. That contention was founded upon an action filed in the Supreme Court on 11 February 2016 in which he is seeking damages for himself and on behalf of various companies insured with Rabobank (the Rabobank companies). Mr James is either the sole or a substantial shareholder in those companies, each of which is now in liquidation. In the Supreme Court action Mr James complains about the actions of the receivers of the TLT companies when they occupied warehouses, two of which were licensed or leased by companies controlled, not by Mr James, but by his brother, seized computers owned by Mr James, and sold off stock, allegedly at less than market value. That stock not only belonged to the TLT companies but also to the Rabobank companies. 22 The causes of action include claims at common law for trespass and conversion and under s 420A of the Corporations Act 2001 (Cth) for breach of the receivers' statutory duty of care. A claim in negligence is also pleaded, alleging that, as a result of the receivers' conduct, the Rabobank companies were unable to continue operating and could not be sold as going concerns. ANZ is a co-defendant on the basis that, despite the terms of the instruments of appointment, the receivers were acting, not as agents of the mortgagor companies, but of the mortgagee (ANZ). 23 Mr James contended that he will recover in those proceedings damages sufficient to enable him to repay all his debts. That contention was vigorously disputed for a number of reasons, not least because ANZ maintained that, even if liability were established, there was no real prospect that any, or sufficient, damages would be recovered by, or flow through to, Mr James personally. In any case, leave is necessary to bring the proceedings in the names of the companies. The proceedings were commenced without leave and an application for leave to be granted nunc pro tunc is listed for hearing on 1 and 2 June 2016. 24 Four issues are raised by the notice of opposition to the petition, only three of which are maintained. The remaining issues are: (a) whether the bankruptcy notice is a nullity; (b) whether the bankruptcy notice had been served in accordance with the requirements of the Act and Bankruptcy Regulations 1996 (Cth); and (c) whether there is sufficient cause within the meaning of s 52(2) of the Act to dismiss petition. 25 The first two questions go to jurisdiction or, more accurately, the power to make a sequestration order, the second to the Court's discretion to refrain from doing so.

Is the bankruptcy notice a nullity? 26 The process of bankruptcy is triggered by the issue of a bankruptcy notice. The proceedings are "quasi penal" in nature and a bankruptcy notice must be strictly construed. See, for example, Re Walsh (1982) 47 ALR 751 at 753 (Lockhart J). Consequently, a bankruptcy notice which fails to meet a requirement made essential by the Act or which could reasonably mislead a debtor as to what needs to be done to comply with its terms is a nullity regardless of whether the debtor was in fact misled: James v Federal Commissioner of Taxation (1955) 93 CLR 631 at 644; Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71 at 79-80. 27 The effect of s 41(2) of the Act read with reg 4.02(2) of the Regulations is that, when a bankruptcy notice is issued which is founded upon non-payment of a judgment debt, a copy of the final judgment or order must be attached to the notice. Section 41(2) states that the notice must be in the form prescribed by the Regulations. Regulation 4.02(1) provides that, for this purpose, the form of bankruptcy notice set out in Form 1 is prescribed, Form 1 contains several references to "attached final judgment/s or final order/s", and reg 4.02(2) states that the notice "must follow Form 1 in respect of its format …". It is clear, however, from reg 4.02(3) that strict compliance is not required; substantial compliance will suffice. 28 Mr Kucharski's evidence is that on 9 December 2014 the Australian Financial Security Authority, known by its acronym AFSA, issued the bankruptcy notice by sending an email to ANZ's solicitors to which the following documents were attached: the bankruptcy notice itself; a copy of the judgment on which the notice was based (in fact the orders, there being no judgment and the orders having been made by consent); and a covering letter from AFSA of the same date. 29 Mr James alleged that the bankruptcy notice is a nullity because at the time the notice was issued the judgment relied upon was not attached. The allegation must be rejected. While in Curtis v Singtel Optus Pty Ltd (2014) 225 FCR 458 at [29], the Full Court (Mansfield, Gleeson and Beach JJ) held that attaching a copy of the final judgment or order to the bankruptcy notice at the time of issue is a requirement of s 41(2) and reg 4.02(2) (for reasons given at [30]-[42]), it also held that, where PDF copies of the judgment and the bankruptcy notice are both attachments to an email, the copy of the judgment is "attached" to the bankruptcy notice for the purposes of the Act and Regulations. The Court noted at [50] that "attached" does not necessarily mean physically fastened. It went on to say at [51]: The question is whether the pdf of the copy judgment could be treated as "attached" to the pdf of the bankruptcy notice, both being attached (together with the letter) to the email. Now clearly they were both attached to the email. The question is whether they were attached to each other. In our view, they were so attached. They were attached to the same email and electronically proximate to each other. Both were sent together rather than separately. Moreover, the one electronic communication (the email and attachments) was not divisible electronically at the time of issue or immediate receipt. Later, of course, one could choose to separately open each pdf and print hard copies separately. But at the time of electronic issue, the bankruptcy notice and the copy judgment or order were together and not separated. In one sense they were electronically "glued" together. They were electronically "fastened" to each other. Short of the two documents being constituted in the one pdf, they were as close electronically as they could be. Further, if they had been constituted in the one pdf, then it might have been argued that they were one and the same document, rather than being a notice with an attachment. Moreover, the fact that each pdf was itself attached to the email does not entail that each pdf could not also be attached to each other. 30 In any event, the Court noted, only substantial compliance with the form is required and there was substantial compliance (at [56]-[57]). 31 No formal submission was made to the effect that Curtis was wrongly decided. As counsel for Mr James acknowledged, I am bound to follow it. On the basis of Mr Kucharski's evidence, I conclude that when the bankruptcy notice was issued a copy of the judgment or orders was attached and that the bankruptcy notice is valid.

Was the bankruptcy notice served? 32 In para 1 of his notice of opposition, Mr James stated: There is no available act of bankruptcy upon which the Applicant can rely upon the basis that the bankruptcy notice and circumstances disclosed are such that there has been no proper and effective service of the bankruptcy notice, the non-compliance with which, is relied upon by the Applicant. 33 It was common ground that if the bankruptcy notice was not served in accordance with the requirements of the Act and Regulations there was no power to make a sequestration order. It was also common ground that service of the bankruptcy notice in a case such as this means service of the bankruptcy notice to which a sealed copy of the judgment or order is attached. As Deane J explained in Kleinwort at 82, the strictness of the rules may give rise to "the possibility of abuse by unscrupulous debtors" but this consequence is "an unavoidable concomitant of the protection of ordinary people", faced with the threat of bankruptcy, many of whom are neither unscrupulous nor dishonest. 34 Given the importance of proper and effective service, personal service is desirable. Nevertheless, reg 4.02A of the Regulations read together with subreg 16.01(1), allows for several alternative methods by which a bankruptcy notice may be served: Skalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107 at [31] (Full Court), approving an observation by Tamberlin J in Re Silvas [1997] FCA 206. ANZ relied on para 16.01(1)(c) which relevantly permits a bankruptcy notice to be served by leaving it "in an envelope or similar packaging marked with the [debtor's] name" at his or her last known address. Paragraph 16.01(2)(b) relevantly provides that a document served on a person in accordance with para (1)(c) is taken, in the absence of proof to the contrary, to have been served on the person when the document is left. 35 In her affidavit of 21 October 2015 (the October affidavit) Ms Grainger swore that on 9 March 2015 she left in a letterbox at a particular residential address in New Lambton Heights, NSW, which I shall call the New Lambton Heights premises, a sealed envelope and that the envelope contained the following documents: (a) an original letter addressed to Mr James dated 11 December 2014; (b) an original bankruptcy noted dated 9 December 2014 (BN 177324) issued to Mr James and signed on behalf of the Official Receiver; and (c) a sealed copy of "judgment orders" entered in the Supreme Court proceedings on 16 May 2014, which she had stapled to the bankruptcy notice. 36 This evidence was supplemented by the tender at the hearing of what purported to be "the file". That included a document headed "ARA - INSTRUCTION SHEET - PROCESS", which was referred to in the oral evidence as a "job sheet". "ARA" appears to be the name of the business Ms Grainger works for. The job sheet records, amongst other things, what documents were "to be served" and "service details". The file, including the job sheet, became exhibit A. I will return to this material later. 37 It is not in dispute that Mr James has resided at the New Lambton Heights premises at all relevant times. Nevertheless, Mr James claimed that he had not been served and that Ms Grainger's evidence to the contrary should not be accepted. 38 In his 23 April 2015 affidavit Mr James stated that he had not received any of the documents Ms Grainger said were in the envelope she had put in the letterbox. Mrs James said that the letterbox is cleared daily, usually by Mr Trenning (which Mr Trenning confirmed), and that she opens mail addressed to her son, but that she did not see the documents referred to in Ms Grainger's affidavit. She maintained that if the documents had in fact been delivered, she would have received them. She and her husband both testified that the letterbox was locked and could only be opened by a key. The evidence was that there are two keys, one on Mr Trenning's keyring and the other in an unlocked cupboard in the house. Mr Trenning said that, after he checks the mail, if his wife is at home he gives her all the mail not addressed to him and if she is at work, as she usually is when he clears the letterbox, he leaves her mail in the "escritoire" (a small writing desk that sits on the hall table) and that which is addressed to Mr James on top. 39 Mr James said that it was not until 22 April 2015 when he read an affidavit of service filed by Ms Grainger in the Federal Circuit Court that he became aware that ANZ professed to have served the bankruptcy notice although he had appeared before a Registrar on 11 March 2015 when ANZ's lawyers also appeared. He claimed that if he had been served with the bankruptcy notice he would have applied to set it aside. 40 I do not doubt for one moment that if the bankruptcy notice had come to Mr James' attention at any time before the creditors' petition was served he would have applied to set it aside, as he had done successfully in respect of ANZ's first bankruptcy notice. He has also fought against the CBA's attempts to bankrupt him, thus far also with some success. There is no reason to think that he had even a temporary period of complacency. Consequently, I accept his evidence and that given by his mother and stepfather. No serious attempt was made to discredit it. 41 But even if Mr James did not receive the bankruptcy notice and accompanying documents that does not necessarily mean that he was not served. It is possible that the envelope was caught up with junk mail and inadvertently discarded. In any event, the question is not whether he received the documents but whether they were served upon him in accordance with the Regulations. As Spender J observed in Repatriation Commission v Gordon (1990) 26 FCR 569 at 578, "[n]on-receipt is not the same as non-delivery'. See, too, Perpetual Nominees v Masri Apartments (2004) 183 FLR 142; [2004] NSWSC 500 at [23]. 42 So was Mr James served in accordance with the Regulations? ANZ's claim that he was only succeeds if I am satisfied that it is more probable than not that Ms Grainger did attend the New Lambton Heights premises on 9 March 2015 and that while there she deposited in the letterbox a sealed envelope containing at least the bankruptcy notice (in its entirety) together with a sealed copy of the judgment. 43 The difficulty for ANZ is that, despite the clarity of her evidence in chief, under cross-examination Ms Grainger's evidence was all over the place. 44 It emerged that the affidavit ANZ read (that which was sworn on 21 October 2015) was not the only affidavit Ms Grainger had provided on the question of service of the bankruptcy notice. It was the third. On 17 April 2015 she had affirmed two. Each of the three affidavits was different in not insignificant respects. 45 In one of the April affidavits, apparently prepared in anticipation of the commencement of proceedings by ANZ in the Federal Circuit Court but not filed in that court, but this, Ms Grainger said that she served the bankruptcy notice by placing it in a sealed envelope and leaving it in the letterbox at the New Lambton Heights premises (the first April affidavit). There was no suggestion that any other document was inserted into the envelope. In particular, she made no mention of the judgment or order. In the other affidavit, however, which was filed in the Federal Circuit Court in support of the CBA's petition (the second April affidavit), Ms Grainger said that service was effected by placing the following documents in a sealed envelope which she left in the letterbox at those premises: the bankruptcy notice; a copy of the judgment/order dated 16 May 2014 "made by the Supreme Court"; a sealed copy of the notice of appearance dated 19 February 2015 filed by ANZ in the CBA's action; and an affidavit affirmed 19 February 2015 by Simon Michael Forshaw, an ANZ employee. 46 Only in the October affidavit did Ms Grainger say that the envelope she placed in the letterbox was addressed to Mr James. In oral evidence, though not in any of the affidavits, Ms Grainger said that the envelope was stamped "private and confidential". 47 Despite the absence of any reference to it in any of the affidavits, in cross-examination Ms Grainger insisted that the letter dated 26 February 2015 was included in the envelope left in the letterbox on 9 March 2015. In cross-examination Ms Grainger denied that she had served a letter dated 11 December 2014, which is the only letter mentioned in the October affidavit, and claimed that she had served the letter appearing in the file dated 26 February 2015. She admitted that this aspect of the October affidavit was false but only in that the date was incorrect. 48 In contrast to what she said in the October affidavit, in neither of the April affidavits did Ms Grainger mention that she had stapled the judgment/order to the bankruptcy notice. 49 In summary, then, Ms Grainger's affidavits contain different accounts of the contents of the sealed envelope she said she had left in the letterbox at the New Lambton Heights premises: First April affidavit Second April affidavit October affidavit • a bankruptcy notice (BN 177324) • a bankruptcy notice (BN 177324) • an original bankruptcy notice (BN 177324) • sealed copy of Judgment/Order • sealed copy of Judgment/Order stapled to bankruptcy notice • sealed copy of the notice of appearance filed by ANZ in the CBA proceeding • original signed letter to Mr James dated 11 December 2014 • affidavit of Simon Forshaw filed in the same proceeding

50 So which, if any, of these affidavits is accurate? If it be the first April affidavit, then there is an incurable defect in the service of the bankruptcy notice because the judgment/order was not attached: see Curtis at [35] and the authorities referred to there. 51 It is true, as ANZ emphasised, that none of the affidavits states in terms that only the document or documents mentioned in it were served. But that is the inference. In each affidavit, Ms Grainger stated on oath or affirmation what she put in the sealed envelope addressed to Mr James before depositing it in the letterbox at the New Lambton Heights premises. There is no reason why the content should have been any different. ANZ submitted, however, that there was an obvious reason: that each affidavit was prepared for a different purpose. That submission must be rejected. In each case the purpose of the affidavit was to prove service of ANZ's bankruptcy notice, which necessarily included service of the sealed judgment/order. (The second April affidavit was actually entitled "Affidavit of Service of Bankruptcy Notice".) Ms Grainger chose to do that by describing the various documents she had put in the envelope which she had placed in the letterbox. In any case, for ANZ's submission to be given any weight, it would need to be based on evidence. ANZ's explanation was not an explanation ever proffered by Ms Grainger. 52 None of the inconsistencies in the various accounts was explained in the evidence in chief, no satisfactory explanation emerged from the cross-examination, and there was no re-examination. 53 When confronted in cross-examination with the inconsistency between the first and second April affidavits, Ms Grainger blamed the "system". You make no mention of any other document in this affidavit, do you? --- No. And this is why our clients usually ask us to swear their own because we're not solicitors. We don't - our system generates very flawed affidavits that have the bare specifics, as I said, the minor --- You knew when you were affirming this affidavit that you were conveying only the two pages of a bankruptcy notice had, according to you, been left in the mailbox at 1 Ridgeway Road, didn't you? --- No. I wouldn't see it that way. No. That's --- Which way did you see it, Ms Grainger? --- Well, the way that we would see it is that the reason we are there is to serve a bankruptcy notice. Like I said, there are other things that get served to like letters, sometimes photographs - those things don't get mentioned in our affidavit. That's not my job to know that. 54 There were a number of problems with this evidence. 55 First, it struck me as disingenuous. Ms Grainger was not a novice. At the time the affidavit was affirmed she had been working as a process server for nearly four years. I do not accept that it was not Ms Grainger's job to know that other documents which are served should be mentioned in the affidavit. Nor do I accept that this was her belief. 56 Second, the evidence did not explain why Ms Grainger affirmed the truth of the affidavit. It was also inconsistent with other evidence she gave. 57 Third, it was common ground that the second April affidavit was prepared by Allens. While the implication from Ms Grainger's answer to the first question was that the first April affidavit was prepared in-house at ARA, I find that difficult to accept. Both contain footers stating that they were prepared by Mr Kucharski and recite his contact details. 58 When asked to explain the evidence in her October affidavit that she stapled the judgment/order to the bankruptcy notice, Ms Grainger replied: Because when things come to us as a bundle, one of the things that our administrator likes us to do is to separate. So, for example, she would like us to create four files here and make sure that we have a letter, a bankruptcy notice, a notice of appearance and an affidavit, and then staple them back together and serve them with nothing missing. 59 She seemed to accept that it was important to staple the two documents together: MR SEXTON: Why, to your mind, was it significant to staple the bankruptcy notice and the judgment orders together? - Because I've served probably hundreds of bankruptcy notices in my career and they always come together with a judgement. 60 If this were true, then why was there no reference to the judgment/order in the first April affidavit? 61 When it was put to Ms Grainger that she could not remember whether she had stapled any of the documents together on 9 March 2015 Ms Grainger said that she remembered stapling "what [she] had in front of [her] together". Mr Sexton SC, sought to clarify her answer. This led to the following exchange (at ts 20): So you stapled the letter of 11 December and the bankruptcy notice and the copy of the judgment and the affidavit of Mr Forshaw together. Is that what you're saying? I can tell you that I stapled a letter, a bankruptcy notice, the judgment order, a notice of appearance and ..... affidavit. This is exactly what I served. HER HONOUR: Sorry, what is exactly what you served? What is in here, this What's here? --- Our copy --- What's the document you have in front of you at the moment? Exhibit A. Right? --- So --- By that, do you mean, if the documents appear in exhibit A, you served them. One can rely on exhibit A, but one can't rely on your affidavit of 21 October 2015 where it differs from exhibit A? --- Yes. If I have to be 100 per cent sure, this is what I'm sure about, my records, what I did. This affidavit [presumably the October affidavit] is not from our system. 62 The trouble with this evidence is that the only complete copies of the bankruptcy notice and judgment/order in exhibit A were annexures to a draft of the second April affidavit prepared by Allens. They were both marked with annexure stamps. The only clean copies of the bankruptcy notice and judgment/order in exhibit A were incomplete. Only the first page of each document was in the file. The bankruptcy notice and the judgment/order which is part of annexure SLG-1 (the annexure to the October affidavit) have no annexure stamps. In all probability the source of the bankruptcy notice and the judgment/order annexed to the October affidavit was not ARA but Allens, which prepared the affidavit. There is no evidence to indicate when the draft affidavit was sent to ARA but it was common ground that it would have been sometime in April. 63 The original signed letter dated 11 December 2014, addressed to Mr James and listed in the October affidavit, but not mentioned in either of the April affidavits, is not one of the documents which, according to the job sheet, was required to be served, and there is no copy of it in the ARA file. 64 According to the job sheet, Ms Grainger was required to serve four documents, described on the sheet as follows: Letter addressed to David Anthony James dated 26 February 2015 Bankruptcy Notice together with Judgment Notice of Appearance Affidavit 65 No evidence was led to show what documents were actually provided to Ms Grainger or ARA on 5 March 2015 when, according to the job sheet, the instructions were apparently received and the "job issued" or, indeed, at any time before April 2015. Nor was any evidence led as to when and how Ms Grainger first came into possession of a complete copy of the bankruptcy notice and judgment/order. On the assumption that the documents listed on the job sheet were sent to ARA by mail, fax or email, no covering letter, transmission sheet or email was tendered. If they were delivered, no witness deposed or testified to what precisely was delivered and when. 66 On no view of the matter did Ms Grainger follow the instructions which appeared on the job sheet. 67 For a start, the method of service stipulated on the job sheet was "[p]ersonal service". 68 Secondly, the job sheet contained the following "special instructions": PLEASE SMS ALLAN [a mobile telephone number then appears] CONFIRMING WHEN SERVED. 69 Despite the instructions, if anything was served, it was not served personally. Nor, despite the dispute as to service, was evidence given to indicate whether an SMS was sent to "Allan" confirming service. 70 Yet, Ms Grainger said that she was the person who "generated" the job sheet. 71 The job sheet nonetheless records that "SG" deposited "the documents" in a letterbox at the given address at 8.40 am on 9 March 2015. Ms Grainger identified the handwriting as her own. I therefore accept that it is likely that Ms Grainger did attend the New Lambton Heights premises on 9 March and that she did leave something in the letterbox, probably an envelope. Consequently, if the envelope was not removed from the letterbox by a person unrelated to Mr James, it is likely that it was inadvertently discarded. The real problem, however, is in determining the contents of the envelope. 72 ANZ submitted that the inconsistencies in the various versions were exaggerated and that at the conclusion of Ms Grainger's evidence a number of matters were "clear enough". They were that: (a) the first page of exhibit A (the job sheet) is a copy of a contemporaneous note prepared by Ms Grainger on the day in question; (b) the note is the best evidence of what occurred on 9 March 2015 and, in particular, of Ms Grainger's attendance at the New Lambton Heights premises and "placing in the letter box a bundle of documents which included the Bankruptcy Notice and the judgment"; (c) the documents had been placed into an envelope on which Mr James' name was written; and (d) the judgment was actually stapled to the bankruptcy notice. 73 While I am inclined to accept that the first page of exhibit A contains a contemporaneous note prepared by Ms Grainger on 9 March 2015, two of these matters were not in the least clear at the end of Ms Grainger's evidence. One is whether the complete bankruptcy notice and a sealed copy of the judgment/order were included in the envelope left in the letterbox. The other is whether the judgment was actually stapled to the bankruptcy notice. 74 The second matter is immaterial. It was common ground that, while Curtis remains the law, if a sealed copy of the judgment was placed in the same envelope as the bankruptcy notice and that envelope was deposited in the letterbox at the New Lambton Heights premises, then service of the bankruptcy notice would have been effected. 75 The first, however, is not. 76 ANZ described the job sheet as a powerful piece of contemporaneous evidence. But the job sheet does not mention what was actually served. The list of documents typed on the job sheet was a list of documents to be served. The handwritten note does not indicate whether all the documents were in fact served. In some circumstances it would be reasonable to infer that the process server served what she was instructed to serve. But the confusion created by the different affidavits and the oral evidence makes it difficult to draw that inference in the present case. At the time she attended the New Lambton Heights premises on 9 March 2015 had she received a copy of the sealed judgment/order? Was she then in possession of the entire bankruptcy notice and a sealed copy of the judgment/order? She, herself, acknowledged that the only reliable evidence was what appeared in exhibit A, but exhibit A is at best for ANZ ambiguous. 77 Mr Golledge of counsel, who appeared for ANZ, submitted that the ARA file which was produced to the Court and which became exhibit A could not have been the complete file. He submitted that the documents Allens provided to ARA were "originals" (presumably based on what was said in the October affidavit, though not the earlier ones) and that it was inherently unlikely that Allens would have sent only one page each of the bankruptcy notice and judgment. He said that this would be a very odd thing for a firm of solicitors "of any ilk" to do. He submitted that it was much more likely that the documents were scanned incorrectly when they were committed to ARA's records. That submission was based on the following evidence about exhibit A elicited during cross-examination: Is this the whole file maintained by the business for which you work? For that particular service? Yes? Yes, that's what we have on file. And the document that has been produced has been photocopied on both sides of the pages? I don't know. We - I scan - we send them to our Kempsey office. They get scanned in. To give that to the court, I printed it from our records. I didn't think that it was two-sided. 78 I accept that it would be odd for a firm of solicitors to provide a process server with only one page of an important two page document. But mistakes do happen. The likelihood that such a mistake was made in the present case depends on the method used to put ARA in possession of the documents. It is presumably for that reason that Mr Golledge sought to emphasise that Allens provided "original" documents to ARA, in contrast, presumably, to photocopied or scanned documents. But there are two problems with the submission. 79 First, it depends on accepting what Ms Grainger said in her October affidavit when there was no reference in the earlier affidavits to original documents and when it is clear that she has no independent recollection of what she served. 80 Second, there is no reliable evidence to indicate that Ms Grainger was ever given originals of the bankruptcy notice and the judgment/order. The bankruptcy notice was issued electronically. As I have already said, both the notice and the judgment/order were attached to an email sent to Allens. No evidence was called to show how Allens conveyed any of the documents to ARA. If the email from AFSA was forwarded directly to ARA, or the attachments were simply copied from one email to another, then it would indeed be hard to see how pages of the attachments could have gone missing. If, on the other hand, the attachments to AFSA's email were printed by Allens, and the print-outs were sent to ARA by mail, DX or courier, it is possible that due to a printing or handling error the second pages were omitted. Or it may be that the documents from AFSA were printed by Allens, the print-outs placed on Allens' file, scanned some time later, and emailed to ARA. In such a case it would be about as likely that a mistake was made in scanning the documents at Allens' end as at ARA's. 81 Here, a mistake was certainly made; the question is when and by whom. As the original email from AFSA is in evidence and the documents attached to it are complete, a mistake must have happened at some point during the time those documents passed from Allens to Ms Grainger and from Ms Grainger to the ARA file. Was it made before the documents were placed in the envelope, for example by Allens providing documents with missing pages to ARA, or at some later point, such as when they were scanned into ARA's system? ANZ offered no evidence of what documents were given to ARA or in what form or by what means. Yet I am asked to infer that it is most likely that the mistake took place at ARA's end, and after the documents were served by Ms Grainger. 82 If both the complete bankruptcy notice and a sealed copy of the judgment had been provided to Ms Grainger before she attended the New Lambton Heights premises on 9 March 2015, it was in ANZ's power to prove it, whether by tendering evidence that at this time the documents (in their entirety) had been given to her or by adducing evidence from the person who dispatched them. Not only did ANZ not do this, but it offered no explanation for the absence of such evidence. Ms Grainger gave evidence on 25 February 2016. ANZ could have sought an adjournment to enable it to submit evidence of what documents Allens sent to ARA and the time and method of dispatch, or, if complete copies of the bankruptcy notice and judgment/order were on the ARA computer file, to call evidence to prove that. Alternatively, as the hearing did not complete on 25 February and did not resume until 23 March, ANZ could have applied for leave to reopen its case to tender such evidence. It took neither course. 83 In a civil case, any fact which has to be proved must be proved "to the reasonable satisfaction of the tribunal": Briginshaw v Briginshaw (1938) 60 CLR 336 at 362. As Dixon J explained in Briginshaw at 361, that is not achieved unless the relevant tribunal feels "an actual persuasion of its occurrence or existence". A "mere mechanical comparison of probabilities [independent] of any belief in its reality" will not suffice. Moreover, the consequences of the fact ANZ seeks to prove (that the bankruptcy notice, including the judgment/order, was properly served) are very serious. If that fact is proved, then the Court has the power to make a sequestration order. If such an order is made, any assets Mr James has are likely to be sold, his livelihood will be adversely affected, for the duration of the bankruptcy he will be unable to manage a corporation, his legal status will change, his passport will have to be surrendered and his capacity to travel overseas drastically curtailed, and "[c]onduct which might otherwise be innocent may become punishable at law": Labocus Precious Metals Pty Ltd v Thomas [2007] FCA 1154 at [53] (Allsop J). Furthermore, a stigma will attach to him, perhaps "as a mark of failure in life": ibid. The gravity of the consequences, like other matters such as the serious nature of an allegation or the inherent unlikelihood of an occurrence, necessarily influences how the question of whether a fact has been proved should be answered. "In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences": Briginshaw at 362. ANZ accepted that these principles apply here. Yet I was invited to reach the requisite state of satisfaction on precisely such a basis. 84 All evidence must be weighed according to the proof which was in one party's power to produce and the other's to contradict: Blatch v Archer (1774) 1 Cowp 64; 65 ER 636. In these circumstances inferences in ANZ's favour should not be drawn (Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E-419D per Handley JA). Indeed, the inference here is that any additional evidence ANZ could have called would not have assisted ANZ's case: ibid at 418E; Jones v Dunkel (1959) 101 CLR 298. 85 When Ms Grainger's evidence concluded, I did not know what to think. I had no real sense of what had been served. And despite Mr Golledge's valiant attempts to persuade me that the necessary documents had been served, I found myself in no different position after submissions. 86 While I am prepared to accept that Ms Grainger attended the New Lambton Heights premises on 9 March 2015 and that she did leave an envelope in the letterbox intended for Mr James, and perhaps addressed to him, in the light of the unsatisfactory state of the evidence I am not reasonably satisfied that both a complete copy of the bankruptcy notice and a sealed copy of the judgment/order were included in that envelope. It follows that I am not satisfied that the bankruptcy notice was served on Mr James on that day and, for this reason, that the act of bankruptcy alleged in the creditor's petition has been committed.

Conclusion 87 Consequently, I do not have the power to make a sequestration order against Mr James' estate and the creditor's petition must be dismissed. In these circumstances it is unnecessary to resolve the remaining issue. Moreover, in view of the proximity of the hearing of the leave application in the Supreme Court, it is also undesirable. 88 ANZ should pay Mr James' costs. The supporting creditors should pay their own costs. There will be orders accordingly. I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann.